Lawmakers Assume Agencies Will Spend $120 Million Less than Authorized

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When is a budget cut not a budget cut? When agencies still have the authority to spend money but lawmakers assume agencies won’t spend all of it. This budget “reversion” philosophy isn’t built entirely on blind faith, however, but on historical trends.

As previously mentioned, the assumption of $120 million in reversions by lawmakers is not merely wishful thinking but instead reflects the historical experience of the past 15 years. Though reversions occur yearly, lawmakers typically don’t book anticipated reversions on the balance sheet. This is because in the past these funds were automatically transferred to dedicated accounts. A change made via the budget this year (HB 2127 – Section 709) will now keep these funds in the Near General Fund. Here are the actual agency reversions since Fiscal Year 1997 according to the Office of Financial Management (all dollars in millions):

FY 97 – $62

FY 98 – $42

FY 99 – $55

FY 00 – $25

FY 01 – $23

FY 02 – $14

FY 03 – $36

FY 04 – $18

FY 05 – $43

FY 06 – $37

FY 07 – $79

FY 08 – $83

FY 09 – $111

FY 10 – $83

FY 11 – $105

15-year Fiscal Year Average = $54 million

The majority of reversions in the past tended to happen in the Department of Social and Health Services and the Office of Superintendent of Public Instruction. Higher education agencies (universities) tend to spend 100% of their budgeted authority. The 2011-13 budget doesn’t specify where these reversions are expected to occur but is based on the anticipated total amount statewide.

Governor Gregoire is expected to take action on the budget on May 2. She plans to issue several vetoes in an effort to increase the paltry $54 million unrestricted ending fund balance.

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Jason Mercier is Director of the Center for Government Reform at Washington Policy Center. He serves on the Executive Committee of the American Legislative Exchange Council’s Tax and Fiscal Policy Task Force and is the private sector chairman of ALEC’s Fiscal Federalism Working Group. He is a contributing editor of the Heartland Institute’s Budget & Tax News, a columnist for SeattlePostGlobe.org, serves on the board of the Washington Coalition for Open Government, and was an advisor to the 2002 Washington State Tax Structure Committee. In June 2010, Governor Gregoire appointed Jason as WPC’s representative on her Fiscal Responsibility and Reform Panel. Jason holds a Bachelor’s degree in Political Science from Washington State University.